The Federal Reserve raised short-term interest rates three times in 2018, and more increases may be on the way. Those increases, which could be reflected in higher returns on savings accounts, make this an opportune time to talk about your savings.
If you haven’t been regularly depositing funds into a savings account, now would be a great time to start. Without a doubt, one of the easiest ways to make saving a habit is to set up an automatic transfer of funds (ATF) from a checking account into a savings account. It’s easy, it’s painless, and even small amounts quickly add up over time. For example, at the end of a year, saving $50 a week adds up to an impressive $2,600—without even taking interest into account.
But there are other ways to save, too. They require a tiny amount of effort, but the reward is multi-faceted. You pad your savings account, of course, but you also train your brain to enjoy the process of saving itself. Create what psychologists call a positive feedback loop, and you’ll become a saver for life.
Step One: Open a savings account.
- That may sound obvious, but according to a 2016 GoBankingRates survey, 34 percent of American adults have zero savings. So, clearly, opening an account may not be as obvious or as simple as it seems. Mascoma Bank offers multiple savings vehicles. But if you’re among that 34 percent with no savings, gather up $100 to open a basic savings account.
Step Two: Get creative in your savings strategy.
- If you’re not already saving money, it’s probably because it doesn’t seem like you have any extra money to spare. But it’s there—you just have to make it appear. How? There are all kinds of ways to accomplish this magic trick.
- Do you use your credit or debit card for minor purchases? Stop. Pay with cash, and make a habit of saving the change.
- Are you down to your last couple of bucks in your wallet? Pull it out and set it aside somewhere before you restock at the ATM.
- Do you eat a lot of breakfasts and lunches out, pay for a lot of caramel macchiatos, have a preference for signature cocktails at your favorite bar? Make a conscious decision to cut back, and every time you do, set aside a $5 reward for yourself.
- The first time you do this, you may feel a bit foolish. You are going to show up at your bank with a handful of loose bills and/or change, fill out a deposit slip, walk up to the teller, and hand over a little stash of money to deposit into your account. You might feel as though you are about six years old! But that’s a good thing, because you are retraining your adult self to feel as good about saving now as you did when you were a child. So put aside your pride and make that deposit—no matter how big, no matter how small.
- Make these things a habit. You can do it!
- The amounts you’re depositing are small. At first, it will seem as if you’re not accomplishing a thing. But as your savings strategies become habitual, that account balance will increase. Every time you look at it, you’ll feel good about it. And you’ll want to keep adding to it. And you’ll feel good when you do. And just like that, your positive feedback loop is in motion—maybe for the rest of your life!